As part of a sweeping effort to upgrade its Mexican operations, Ford Motor Company will refurbish its assembly plants in Cuautitlan and Hermosillo and an engine plant in Chihuahua. The company, however, withheld specific details of the overhaul, which will take place over the next few years.

“Ford has been doing business in Mexico since 1925, and we were the first automaker ever in the country. We are proud of our manufacturing capability in Mexico today, and we plan to upgrade our facilities for the future, just as we have been modernizing many of our facilities in the U.S. and Canada,” Mark Fields, Ford’s President of the Americas, said in statement that accompanied the announcement.

The investment does not include Ford’s plan to build a new low-cost manufacturing facility in North America, Fields also emphasized.
“We remain committed to a new low-cost manufacturing facility. But we have made no decisions on where it will be located,” Fields explains. “The key to success will be high quality and low cost, and that certainly can be in the U.S., Canada, or Mexico,” he said.

Ford inaugurated its first plant in Mexico City to build the Model T. Today, Ford builds the F-Series pickup and Ikon small car in Cuautitlan. Sources told TheCarConnection that under the reconstruction plan, a substantial part of the Cuautitlan plant could be torn down and then completely rebuilt. Engines for several vehicles sold globally are made in Chihuahua and the output of the plant could be nearly doubled under the plan. The Ford Fusion, Mercury Milan, and Lincoln Zephyr are built in Hermosillo.

“For more than eight decades, we have worked hand-in-hand with Mexico, its people and its government,” says Louise Goeser, Ford of Mexico President and CEO. “Mexico remains an excellent business environment for Ford, and it will remain a key manufacturing location for our global automotive operations as a result of these investments.”

Turnaround working?

Fields, the man in charge of Ford’s North American restructuring effort, said in a speech Wednesday in Washington that Ford’s turnaround is working.

Ford has slowed its market-share decline and is on pace to convert three-quarters of its North American assembly plants to flexible manufacturing by 2008, he noted.

“This will enable Ford to switch between models and deliver more products faster based on changing demand,” he said.

The Mexican move is likely to draw criticism from the United Auto Workers union, which stands to lose 25,000 to 30,000 jobs as a result of Ford’s Way Forward restructuring plan announced in January.

UAW President Ron Gettelfinger said earlier this week that the union had not had a chance to review Ford’s plans. Meanwhile, Gettelfinger has appointed a new top bargainer at Ford — Bob King, an experienced UAW vice president, who is considered likely to take a harder line with Ford over the expansion in Mexico.

According to a document circulating in Detroit, Ford’s $9.2 billion investment could create some 150,000 jobs, reducing unemployment in Mexico by about 15 percent.